Problem technology credits drove down quarterly profits at Opus Bank in Irvine, Calif., which said it will pull back on tech lending even though that had become one of its most important niches.
The $7.5 billion-asset company reported earnings of $16.1 million in the second quarter, or 8% lower than a year earlier. Earnings per share were 46 cents, falling 16 cents short of an estimate of analysts polled by Bloomberg.
The provision for problem loan losses nearly doubled to $10.9 million. Two large technology clients were the culprits, Opus said in a news release Monday.
Opus plans to scale back lending to the tech sector “for the foreseeable future,” Chairman and Chief Executive Stephen H. Gordon was quoted as saying in the release.
Still, loan growth in other areas helped lift the company’s total portfolio 31% to $6.1 billion. Multifamily and commercial real estate loans account for the bulk of the book.
Net interest income rose 14% to $62.5 million. The net interest margin shrank 29 basis points to 3.8%.
Fee-based income rose 62% from a year earlier to $13.2 million thanks to higher trust fees stemming from its April acquisition of Pensco Trust Co., an investment firm in San Francisco.
Expenses jumped 34% to $38.4 million because of higher compensation costs as well as well as costs associated with the acquisition.
Shares closed at $32.13, down 12%, on Monday.